Mobile payment schemes are typically national in approach, but there remains a real need to coordinate new payment solutions at a regional level.
Given that scalability is crucial to success in mobile payments, industry-wide standards have a key role to play.
Cross-border payment conundrums
Cross-border payments lag behind in-market payments in terms of costs, convenience and security. The Payment Services Directive (PSD) has been established to provide a single framework for payment standards and obligations, resulting in the Single European Payments Area (SEPA).
However, progress has not been painless, with countries disputing the regulatory requirements to be imposed on non-banks, and many missing the first deadline for implementation.
Such disagreements show the difficulties in translating national payments approaches into workable regional policy. At the same time, consumer groups are concerned that new EU payment rules could put end users at greater risk of fraud.
Payment Services Directive timeline1
For mobile operators, questions remain about their prospective status under the PSD. New definitions concerning payment institutions are set to co-exist alongside a different set of stipulations for e-money institutions, which may complicate measures to create equality. Outside Europe, operators are taking a lead in providing cross-border payment capabilities.
Increased collaboration within and between sectors
Although business models for payment services remain fluid, the overall level of cooperation between the banking and telecommunications sectors is increasing. In China, an alliance has been struck between 18 Chinese banks, card association China UnionPay, China Telecom, China Unicom and device vendors, with a view to creating a single, open platform for mobile payments.
In the Netherlands, the top three retail banks have formed a joint venture company with the country's three mobile network owners. Such high levels of participation translate into wider coverage of both mobile subscribers and bank customers, boosting the addressable market for mobile payment.
Even so, many partnerships remain defensive in nature, as banks, operators and card issuers pursue a range of solutions. Yet in markets where mobile money solutions have seen rapid take-up, operators have played a dominant role and partnership ecosystems have proved robust.
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